Europe and the digital race

Europe out of the Digital Olympics

Victor Ângelo

 

The progress of the digital age, which has accelerated over the last decade, will be even faster, deeper and more pervasive in the coming years. Major transformations in information processing and use are coming, with amazing advances in artificial intelligence, 5G networks, new generations of microprocessors, 3D printing techniques, and in protecting cyber systems from hostile attacks. These transformations will have an enormous impact on the exercise of political power, on the economy and functioning of societies, on individual attitudes, as well as on international relations. 

Digital mega-investments are taking place today in the United States, China, Taiwan, South Korea, and Japan. The latter three produce 60% of the semiconductors and are moving at a rapid pace towards faster, more efficient processors, and much less gluttonous in terms of energy consumption. 

Where will Europe stand in this new technological framework? Ursula von der Leyen last week defined the digital domain as a priority. The EU currently produces about 10 percent of the world's semiconductors. It has lost a lot of ground in the last 30 years. In 1990, it accounted for 44 percent of global transistor production.  The ambition defined by the President of the European Commission is to reach 20% in 2030. For this, it will be necessary to mobilize public and private investments in the region of 160 billion US dollars. It won't be easy. It is a lot of money, but insufficient when compared with the plans of others. South Korea, for example, is ready to invest 450 billion dollars. Taiwan Semiconductor Manufacturing Co. (TSMC), the world's number one chipmaker, will invest $100 billion over the next three years to expand its capacity. Interestingly, part of this investment will take place in China, across the strait, and part in the United States. Thus, strategic interdependencies are created.

Europe is lagging not only in the field of processors. We are out of the league of champions when it comes to technology platforms. When you look at the top 10, you notice that six are American and four are Chinese. The platforms we know, in this part of the world where we are, such as Facebook, Twitter, Netflix, Google or even Uber, Airbnb or Booking, all have one or more Chinese competitors (Tencent, Weibo, WeChat, Baidu, iQuiyi and more).

Our picture is also not the best when it comes to the so-called unicorns. Many of the new applications and technologies are developed by newly established companies that the capital market values above $1 billion and calls unicorns. These companies are very important creative agents in the areas of artificial intelligence, financial software, e-commerce, and e-logistics. Digital giants follow them closely and eventually acquire the most innovative ones. Today, the inventory of unicorns totals 827 companies. Of these, only 57 are based in the EU area, with France and Germany at an absolute advantage in the tiny European share.

Given this, what does digital sovereignty mean in the EU? The question is even more pertinent if one takes into account the correlation between defence and artificial intelligence (AI). A recent report by the National Security Commission on Artificial Intelligence, a US commission, shows that the major defence competition with China is primarily about AI. Whoever wins that race will have a critical advantage over the other side. The EU is out of this championship.

Many other questions remain, concerning the protection of people's rights, the fight against information manipulation, or even the meaning of democracy in robotic times.  All of them are important. But for us Europeans, the fundamental challenge is to clearly define a plan that allows the EU to leap from the periphery to the centre of the digital issue.

(Automatic translation of the opinion piece I published in the Diário de Notícias, the old and prestigious Lisbon newspaper. Edition dated 24 September 2021)